Samsung posts record earnings as smartphone strategy pays off

Samsung Electronics Co posted record earnings as sales of its smartphones surged, widening the company’s global lead as its latest Galaxy handset hits stores to take on Apple Inc in the US.

Net income rose 42% from a year earlier to 7.15 trillion won (€4.9 billion) in the three months ended March, Samsung said in a statement yesterday. Sales of its smartphones jumped 56% to 69.4 million units, almost double the number of iPhones sold by Apple, Strategy Analytics said.

Demand for Samsung’s devices, including the flagship Galaxy S4 that goes on sale today and cheaper phones targeting emerging markets, are stoking sales in the €275bn handset market and driving most of the South Korean company’s profits. Samsung said competition in the market, which is already slowing Apple’s growth, may intensify this year.

“It yet again succeeded in taking away some of the smartphone share from Apple,” said Lee Seung Woo, an analyst at IBK Securities Co.

“Demand for Galaxy S4 is outstripping its supply.”

Samsung, the world’s biggest maker of mobiles, fell 0.5% to close at 1,486,000 won in Seoul trading, trimming the shares’ gain in the past year to 11%. Investors may not buy on today’s news as the company already reported preliminary operating profit on April 5, Heo said.

Operating profit at Samsung’s mobile unit was 6.51 trillion won. Profit at the consumer electronics unit, which oversees the TV and home-appliance businesses, fell to 230bn won from 500bn won a year earlier.

Samsung is also the world’s largest maker of TVs.

“We may experience stiffer competition in the mobile business due to expansion of the mid- to low-end smartphone market,” Samsung’s senior vice president Robert Yi said. “TV growth will continue to wane in developed markets.”

Worldwide shipments of LCD sets, the biggest TV segment, fell for the first time in 2012, NPD Group’s DisplaySearch said on March 21. The global average selling price for flat-panel TVs declined 2%, the researcher said.

The Galaxy S4 — with a 5-inch screen, 13-megapixel camera and motion-detecting software — went on sale yesterday in South Korea. Outlets in Australia and the US will begin selling the device, which is thinner and lighter than its predecessor, tomorrow.

Bloomberg